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Country Profile

Luxembourg
www.lloyds.com/LuxembourgMI

April 2014
filip.wuebbeler@lloyds.com

©Lloyd’s 2
MAIN EXPORT PARTNERS: Germany 22%, France 16%, Belgium 13% (2011)

MAIN IMPORT PARTNERS: Belgium 30%, Germany 26%, France 11% (2011)

MAIN EXPORTS: Machinery and equipment, steel products,chemicals

MAIN IMPORTS: Minerals, metals, foodstuffs

FULL NAME / CAPITAL CITY: Grand Duchy of Luxembourg / Luxembourg

LANGUAGE: Luxembourgish, French, German
Source: Disaster Statistics based on: Prevention Web (2013); Export Statistics based on CIA World Factbook; Doing Business Indicators based on World Bank & World Economic Forum
KEY FACTS
GDP (PPP): US$ 43bn (Global Rank #95)

POPULATION: 0.5m (Global Rank #161)

IMF CATEGORISATION: “Developed”
DISASTER YEAR ECONOMIC COST (US$ x 1000)
Storm 1990 90,000
Storm 1990 90,000
Storm 1990 90,000
Storm 1990 90,000
Storm 2010 31,000
2012 Rank 2013 Rank Change i n Rank
EASE OF DOING BUSINESS: 50 56 -6
COMPETITIVENESS: 23 22 1
FREEDOM FROM CORRUPTION: 11 11 0
©Lloyd’s 3
Insurance: Yes
Reinsurance: Yes
Coverholders: No
LLOYD’S TRADING POSITION
Luxembourg
www.lloyds.com/crystal
All data, sources & data limitations are available for download at www.lloyds.com/comparecountries; * 2013 total non-life based on CAGR projection
Percentile Rank (1-100) 2012 Purchasing Power Parity (PPP) basis
in International $ bn
Purchasing Power Parity (PPP) basis
in International $
GOVERNANCE INDICATORS SIZE OF ECONOMY WEALTH PER CAPITA
Premiums in US$ m
TOTAL NON-LIFE DIRECT INSURANCE MARKET* NON-LIFE DIRECT INSURANCE MARKET
Premiums in US$ m; by OECD Class
LLOYD’S GROSS SIGNED PREMIUMS
Gross Signed Premiums in US$ m; by country of origin
KEY STATISTICS
ES IT PT
spain italy portugal
2012
82 66 GovernmentEffectiveness 81
Political Stabilityand Absence of
Violence/Terrorism
70 43 63
Control of Corruption 78 82 58
RegulatoryQuality 76 78 75
Rule of Law 82
Voice and Accountability 78
83 62
80 74
2
2
8
2
4
4
2
9
0
0
1,000
2,000
3,000
4,000
5,000
2006 2012 2018f
PT ES IT
2
1
,
5
4
5
2
3
,
0
4
7
2
7
,
1
7
0
0
25,000
50,000
75,000
100,000
2006 2012 2018f
PT ES IT
5
,
7
3
8
5
,
3
3
8
5
,
5
3
9
0
25,000
50,000
75,000
2011 2012 2013
PT ES IT
4
5
2
6
4
1
0
100
200
300
400
500
600
700
2011 2012 2013
PT ES IT
2,402
1,926
1,150
398 Motor
PA & Health
Property
Li abi lity
MAT
Miscellaneous
Luxembourg
2012
US$ 1.0bn
©Lloyd’s 4
The ruling " Gambia Coalition" is adopting spending cuts, tax increases on high earners, a VAT hike, and measures to contain house-price
inflation. The Luxembourg Socialist Workers' Party (Lëtzebuerger Sozialistesch Aarbechterpartei: LSAP), the liberal Democratic Party (Demokratesch Partei:
DP), and the Greens (Déi Gréng: DG) agreed to form a government following elections in October 2013. The "Gambia Coalition" – so named because the
different colours associated with the three parties match those of the Gambian flag – marks the first time since 1945 (except 1974–79) that the government
has not been led by the Christian Social People's Party (Chrëschtlech Sozial Vollekspartei: CSV). The coalition's agenda combines budget consolidation –
partly via a value-added tax (VAT) hike due in late 2014 to offset foreseeable shortfalls in e-commerce VAT revenues from 2015 – with increased state
intervention in the labour (to tackle unemployment) and housing markets (to contain house-price inflation).

Banking sector's exposure to financial and Eurozone debt crises will restrain growth. Notwithstanding the current recovery of Luxembourg's GDP
growth to roughly 2%, it will remain more subdued in 2014–15 than in pre-2008 times as financial institutions' operations – notably corporate lending and
capital flows to investment funds – are impaired by the damage inflicted on their balance sheets.

Government will continue on pro-EU policy course, protecting business-friendly environment. Any government will try to protect Luxembourg's status
as one of the most affluent countries in the world by looking to improve or at least preserve the business environment. The European Commission's attempts
to change Luxembourg's banking and tax regulations have encountered domestic opposition, although the government has conceded to the relaxation of
banking secrecy and increased information exchange, in line with the Organisation for Economic Co-operation and Development's (OECD) progress towards
greater co-operation to tackle tax evasion.

Luxembourg agrees to soften banking secrecy, consenting to adopt system of automatic information exchange with other countries from 1
January 2015. This is the result of pressure from the OECD and other European countries, which have accused Luxembourg (and peers such as Switzerland
and Austria) of profiting from tax evasion and being tax havens. The introduction of automatic information sharing will probably result in a prior decrease and
repatriation of deposits. Banks will prepare themselves for the new "regime" in advance of the 1 J anuary 2015 deadline, making it necessary for some
depositors to legalise their positions with the tax authorities in their countries of origin.
GROSS DOMESTIC PRODUCT (GDP)
(nominal GDP levels in billion US$; Real GDP change)
For daily updates visit: > www.ihsglobalinsight.com
BUSINESS ENVIRONMENT INFORMATION
(provided by IHS Global Insight, March 2014)
TOP-10 SECTORS (BY VALUE ADDED)
(value added in billion US$ & 2014 Change in real %)
BUSINESS ENVIRONMENT
-4.1%
2.9%
1.7%
0.3%
1.3%
2.0%
2.5%
2.3% 2.3%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
0
20
40
60
80
100
2010 2011 2012 2013 2014 2015 2016 2017 2018
N/A
©Lloyd’s 5
2009 MAJOR DIRECT INSURERS
(Net Premiums in million US$)
2012 DIRECT GROSS PREMIUMS
(Gross Written Premiums by Luxembourg-based entities only)
Source: Association: > www.aca.lu Source: Commissariat aux Assurances
The size of the non-life market in 2012 was around US$ 1bn for locally based carriers: With a population of only 490,000, the Grand Duchy of Luxembourg is the
smallest member of the European Union (EU) and Economic and Monetary Union (EMU). The country’s economy is based on substantial international activity, as exports and
imports of goods and services are both very large relative to the economy. In addition, the financial services sector makes up more than a quarter of GDP. The insurance
business in Luxembourg is well developed, as major European insurance companies have their operations in Luxembourg. While there is also an active captive insurance
industry in Luxembourg, the sector is nowhere near on the scale of Bermuda or the Cayman Islands. Based on Compound Growth Rates (CAGR), the market is estimated to
be worth US$ 1.1bn in 2013.
International foreign insurers: There are over 600 European insurance companies (including life) operating in Luxembourg, the main ones coming from the UK, Ireland,
France, Germany and Belgium.
Broker market: Distribution is dominated by the agency system, and to a smaller extent, broker networks.
Local reinsurers: There are a number of locally established reinsurance companies in Luxembourg working largely in the captive sector.
Outlook: Growth in the insurance market is likely to be minimal, due to the high level of saturation, small population and lack of industrial facilities.






BUSINESS CULTURE GUIDE
>http://www.kwintessential.co.uk
(View Resources >Culture Guide)
QUICK LINKS / USEFUL SOURCES
Insurance Market Profiles
>www.iii.org/international/profiles
Association of Luxembourg Insurance
Companies
>www.aca.lu
Insurance Companies Commission
>www.commassu.lu
Lloyd’s Agency Network
>www.lloyds.om/agency
Lloyd’s Claims Team
>www.lloyds.com/claims
INSURANCE ENVIRONMENT
11
23
25
25
29
44
48
124
224
318
AME
Chartis
D.K.V.
Allianz
Fortis
P&V
Baloise
AXA
La Luxembourgeoise
Foyer
2,402
1,926
1,150
398 Motor
PA & Health
Property
Li abi lity
MAT
Miscellaneous
Luxembourg
2012
US$ 1.1bn
©Lloyd’s 6








A Type 3 office is defined as a Lloyd's office headed by a
Country Manager who in addition to meeting regulatory
requirements in that territory also proactively supports the
business development objectives of the managing agents
in that territory.

Type 3
Office

Lloyd’s
Country
Manager

2013 GROSS SIGNED PREMIUMS*

Total US$ 131m

Reinsurance US$ 67m
Direct US$ 64m
SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); unaudited figures based on country of origin and processing by calendar year; see Appendix for details
Mr Ralph Van Helden
Benelux Regional Manager
Lloyd's Beurs - World Trade Center
Beursplien 37, Postbus 30196
3001 DD Rotterdam Netherlands
TELEPHONE: + 31 (0) 10 205 2110
EMAIL: ralph.vanhelden@lloyds.com


*COUNTRY OF ORIGIN PREMIUMS
 Policyholders are based or
headquartered in this territory;

 Premiums may be written outside
this territory;

X Not necessarily where risks are located
X May differ to what is reported to
local regulator (dependent on local requirements).


Gross Signed Premiums; Direct versus Reinsurance; in million US$
2009-2013 LLOYD’S TOTAL PREMIUMS 2013 LLOYD’S HIGH LEVEL CLASSES
Gross Signed Premiums; high level classes; in million US$
LLOYD’S BUSINESS
19
24
31
15
29
12
12
14
11
12
0
5
10
15
20
25
30
35
40
45
50
2009 2010 2011 2012 2013
Direct Reinsurance
1.4
3.0
0.4
3.0
14.3
6.6
10.4
0.5
1.4
0.0
0 5 10 15 20
Accident & Health
Aviation
Casualty Treaty
Casualty
Energy
Marine
Property (D&F)
Property Treaty
Overseas Motor
UK Motor
©Lloyd’s 7
2014 INDUSTRY EVENTS

 IFASIC, 23-24 October
 Verzekeringsbranchedag, November
 NARIM / BELRIM / Inward visits, Ongoing

2014 LLOYD’S EVENTS

 Coverholder Event, Q3
 COB Claims, 19 March
 Maritime Event, 19 J une


MARKET INTELLIGENCE
Available Market Intelligence products for this territory include:







Country Profile
Market Presentation
Country Roundup
Class Review – Lite (work in progress)
LLOYD’S OBJ ECTIVES
 Enhance Benelux profile as a meaningful contributor to profitable growth in Europe. We continue to provide high quality service and support, based on strong relations and
interaction with Lloyd’s Managing Agents and the local insurance community.
 Further build Lloyd’s profile in Benelux: To be achieved through profile raising activities, brand building activities and education.

 Broaden distribution network: Enhance the number of coverholders and build relationships with new brokers, risk managers and potential coverholders.

 Protect the Lloyd’s brand: By focusing on building relationships with Belgian regulators, employing new legal/compliance/regulatory assistant in the office. Also Investigate
a business model for establishing a license in Luxembourg.
LLOYD’S KEY INITIATIVES 2014
EVENTS & MARKET INTELLIGENCE
www.lloyds.com/LuxembourgMI
©Lloyd’s 8
APPENDIX
MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA
Source: IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight.
Notes: GDP data on size and wealth of the economy is reported in Purchasing Power Parity (PPP) terms; this is the most accurate indicator of the true standard of living in
each country and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than the
market exchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $
terms in each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rates.
INSURANCE MARKET DATA
Source: Reported data derived by Lloyd’s Market Intelligence team; original source is regulatory bodies, associations, third party information providers.
Notes: Data is reported in US$. For more information, see www.lloyds.com/comparecountries.
Exchange Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com.
LLOYD’S PREMIUM DATA
Source: Reported data derived by Lloyd’s; original source is Xchanging (data therefore contains only premiums processed by Xchanging).
Notes: Data is reported is US$, on a calendar year basis and is signed gross premiums. This differs from the data published in the Lloyd’s Annual Report, which is also on a
calendar year basis, but is written gross premiums and sourced directly from Syndicates. Differences are therefore (1) timing inconsistencies between signed and written gross
premiums; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantial
amount of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor).
Exchange Rates Note: Data has been converted to US$ using monthly exchange rates provided by Xchanging.
Definitions:
Gross Signed Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but
before the deduction of outward reinsurance premiums.
Calendar Year: Relates to the calendar year in which the premium, additional or return, is processed by Xchanging. This is irrespective of the actual underwriting year of
account, which is determined by the inception date of each risk.
Country of Origin: Denotes the domicile of the insured party (i.e. the coverholder or policyholder). This is the country from which demand for the insurance / reinsurance
emanates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes.
Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by “Country Of Origin”, but “French” for regulatory reporting
purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 “Underwriting Year of Account” but may not be processed by Xchanging until 2008
and so be allocated to the 2008 “processing year”.
ACCESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries.
 DISCLAIMER: This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information, Lloyd's does not
accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a
result of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document.